Reuben Garner

Reuben Garner from The Benchmark Company asked for more detailed insights into the growth drivers within TopBuild's commercial business beyond data centers, specifically inquiring about other verticals. Garner also questioned if the mechanical insulation segment presents the most significant upside potential to the company's 2026 outlook.

Answer

President and CEO Robert Buck identified education, healthcare, and manufacturing as significant growth verticals, alongside food and beverage, ensuring diversification. Buck confirmed that TopBuild sees upside potential in commercial, industrial, mechanical, and roofing segments, driven by growing backlogs and strong execution, with high confidence in synergy realization.

Reuben Garner asked for more detail on other growth drivers in the mechanical and commercial segment beyond data centers, and if the mechanical side offers the most upside to the outlook.

Answer

Robert Buck, President and CEO, discussed diversification across verticals including education, healthcare, manufacturing, and food and beverage. He sees upside potential in commercial, industrial, mechanical, and roofing, driven by growing backlogs and synergy confidence, emphasizing bidding across all verticals.

Reuben Garner of The Benchmark Company asked if the downturn in new housing presents an opportunity for TopBuild to increase its focus on the residential repair and remodel (R&R) market.

Answer

CEO Robert Buck responded that the Service Partners distribution business actively serves the R&R market by supplying the smaller contractors who perform that work. He described it as a 'healthy part' of the business and a continued area of focus for the distribution segment.

Reuben Garner of The Benchmark Company asked why the residential portion of the distribution business outperformed the installation business and whether this was due to smaller installers buying from distribution in a downturn.

Answer

CFO Rob Kuhns confirmed that the dynamic of smaller installers buying less-than-truckload orders from distribution was a contributing factor. However, he noted that a larger driver of the difference was the distribution segment's lower exposure to the multifamily market, which experienced a significant downturn of approximately 30% in the quarter.

Reuben Garner asked for clarification on the base number for HNI's 2026 double-digit EPS growth outlook, inquired about the first-quarter outlook for Workplace Furnishings, the confidence in full-year acceleration, and any supporting backlog or order numbers. He also asked about key learnings or surprises from the Steelcase acquisition integration and the drivers behind the Residential Building Products segment's outperformance and growth investments.

Answer

Vincent Paul Berger II clarified that the double-digit growth for 2026 would be off a base of $3.53, which includes the Steelcase stub period but excludes purchase accounting. Jeffrey D. Lorenger attributed confidence in Workplace Furnishings acceleration to strong activity, high bid counts (particularly in contract), and increased funnel metrics for large projects, consistent across both legacy HNI and Steelcase, alongside firming macroeconomic conditions. Lorenger also noted growing confidence in the Steelcase transaction due to complementary brands, geographies, talented teams, and positive market response. Regarding Residential Building Products, Lorenger and Berger highlighted closer customer engagement, laser-focused go-to-market strategies, a strong product lineup, an effective service model, and strategic investments in new categories like wood stoves and DIY, leading to market share gains and outperformance.

Reuben Garner asked for clarification on the base number for HNI's 2026 double-digit EPS growth outlook, inquired about the first-quarter outlook for Workplace Furnishings, the confidence in full-year acceleration, and any supporting backlog or order numbers. He also asked about key learnings or surprises from the Steelcase acquisition integration and the drivers behind the Residential Building Products segment's outperformance and growth investments.

Answer

Vincent Paul Berger II clarified that the double-digit growth for 2026 would be off a base of $3.53, which includes the Steelcase stub period but excludes purchase accounting. Jeffrey D. Lorenger attributed confidence in Workplace Furnishings acceleration to strong activity, high bid counts (particularly in contract), and increased funnel metrics for large projects, consistent across both legacy HNI and Steelcase, alongside firming macroeconomic conditions. Lorenger also noted growing confidence in the Steelcase transaction due to complementary brands, geographies, talented teams, and positive market response. Regarding Residential Building Products, Lorenger and Berger highlighted closer customer engagement, laser-focused go-to-market strategies, a strong product lineup, an effective service model, and strategic investments in new categories like wood stoves and DIY, leading to market share gains and outperformance.

Reuben Garner of Benchmark sought clarification on HNI's full-year guidance, asking for a comparison of fourth-quarter expectations against previous projections, particularly regarding revenue and costs. He also questioned the sustainability of the residential building products segment's market outperformance and its growth runway for the upcoming year. Additionally, Mr. Garner inquired about potential risks during the Steelcase integration, specifically how HNI plans to capitalize on accelerating demand in the contract business while merging operations.

Answer

Vincent Paul, Executive Vice President and CFO, clarified that Q4 revenue expectations for both segments remain consistent with prior forecasts, projecting high single-digit growth. He attributed slight pressures to product mix, timing of investments, increased insurance costs, and a higher updated tax rate, emphasizing that the second-half outlook remains unchanged. Jeff Lorenger, Chairman, President and CEO, expressed confidence in the residential segment's continued ability to outperform the market, citing early successes from ongoing investments in retail, new products, and wholesale channels. Regarding Steelcase, Mr. Lorenger assured that front-end operations, including dealer networks and salesforces, will remain separate to ensure continued market participation and capitalize on demand acceleration, while integration efforts focus on back-end cost synergies.

Reuben Garner asked for a comparison of HNI's full-year guidance, particularly for Q4, against previous expectations, noting potential shifts in top-line and costs. He also questioned the sustainability of outperformance in residential building products and the company's ability to grow volume above market in a flat environment. Finally, he inquired about integration risks with Steelcase, especially concerning HNI's capacity to capitalize on accelerating demand.

Answer

Vincent Paul, EVP and CFO, explained that Q4 revenue is largely in line, but product mix (more project-driven, lower margin) and timing of investments (shifted to Q4) are impacting profitability. He also cited insurance-related pressures and an updated higher tax rate for the second half. Jeff Lorenger, Chairman, President and CEO, expressed confidence in outperforming the residential market due to ongoing investments and strong operational models, even in a flat environment. Regarding Steelcase, he assured that dealer partnerships, brand distribution, and salesforce structures will remain intact, enabling HNI to participate in market upswings while pursuing cost synergies.

Reuben Garner of The Benchmark Company LLC inquired about the drivers behind the increased earnings outlook, whether the rebound in the small and medium-sized business (SMB) segment signals broader acceleration, and the sources of outperformance in Residential Building Products.

Answer

CEO Jeffrey Lorenger attributed the higher EPS outlook to growing confidence in network optimization and synergy initiatives from the KII acquisition. He and CFO Vincent Berger explained the SMB rebound was more a recovery from a temporary tariff-related pause than a traditional leading indicator. For the residential segment, they cited strong competitive execution, market share gains, and early success from growth initiatives in new products and channels in both new construction and remodel/retrofit.

Reuben Garner of The Benchmark Company LLC inquired about the specific drivers for the increased earnings outlook, whether the rebound in the SMB business signals broader acceleration or is merely a catch-up, and the sources of outperformance in the Residential Building Products segment.

Answer

Chairman, President & CEO Jeffrey Lorenger attributed the higher EPS outlook to increased confidence in network optimization and synergy initiatives. Both Lorenger and EVP & CFO Vincent Berger characterized the SMB rebound as a return to normal after a temporary tariff-related pause, rather than a traditional leading indicator. They noted residential outperformance stems from strong competitive execution and early benefits from growth initiatives across both new construction and remodel channels.

Reuben Garner of The Benchmark Company LLC inquired about the drivers behind the increased earnings outlook, the nature of the rebound in the Small and Medium-Sized Business (SMB) segment, and the sources of outperformance in Residential Building Products.

Answer

Chairman, President & CEO Jeffrey Lorenger attributed the improved EPS outlook to growing confidence in network optimization and synergy initiatives. He and EVP & CFO Vincent Berger characterized the SMB rebound as a return to normalcy after a tariff-related pause, rather than a traditional leading indicator. For the Residential segment, they credited strong competitive execution, early success from growth initiatives in both new construction and remodel/retrofit channels, and the company's unique distribution model for outperforming a challenging market.

Reuben Garner of The Benchmark Company LLC inquired about the specific drivers behind the increased earnings outlook, whether the rebound in the SMB business signals broader market acceleration, and the sources of outperformance in the residential segment amid a challenging housing market.

Answer

CEO Jeffrey Lorenger and CFO Vincent Berger attributed the improved earnings outlook to increased confidence in network optimization and KII synergy benefits. They clarified that the SMB business recovery is more of a return to normalcy after a tariff-related pause, rather than a traditional leading indicator of a broader market upswing. For the residential segment, they credited the outperformance to strong competitive execution, early benefits from growth initiatives in new products and channels, and enhanced market connectivity in both new construction and remodel/retrofit.

Reuben Garner of The Benchmark Company LLC inquired about the drivers behind HNI's increased earnings outlook, whether the rebound in the SMB business signals broader acceleration, and the sources of outperformance in the residential segment.

Answer

Chairman, President & CEO Jeffrey Lorenger attributed the improved earnings outlook to growing confidence in network optimization and KII synergy realization. He characterized the SMB rebound as a return to normal after a tariff-related pause rather than a traditional leading indicator. For the residential segment, Lorenger and EVP & CFO Vincent Berger pointed to strong competitive execution, early benefits from growth initiatives, and outperformance in both new construction and remodel channels despite soft market-level permit activity.

Reuben Garner from The Benchmark Company asked several questions regarding the SMB business, the impact of tariffs, and the outlook for the residential segment. He specifically questioned if transactional SMB activity improved in April, whether Chinese import competition presents an opportunity, what caused the change in the Q2 tariff impact, and what end-market assumptions underpin the second-half residential forecast.

Answer

CEO Jeff Lorenger and CFO V.P. Berger addressed the questions. Berger noted that SMB orders did pick up in the last five weeks and confirmed HNI is not dependent on Chinese imports for its products. He explained the Q2 tariff impact is a timing issue due to tariff implementation delays and honoring prices on a larger order book. Lorenger added that the residential growth outlook relies on internal strategic initiatives kicking in, particularly in remodel/retrofit, rather than expecting significant help from the housing market itself.

Reuben Garner inquired about the strategic shift from focusing on margins to investing in growth, the specific investments in the workplace segment, the drivers behind the residential products growth forecast, and the company's exposure to the federal government market.

Answer

CEO Jeff Lorenger confirmed that while margin expansion remains a priority, the company is increasing investment in selling capabilities, customer experience, product development, and digital connectivity. EVP & CFO VP. Berger added that residential growth is supported by organizing around the consumer, adding selling capacity, and a strong product pipeline, without degrading margins. Regarding the federal government, both executives described it as a small but stable part of the business with no current changes in buying patterns.

Reuben Garner inquired about the drivers of near-term softness in Residential Building Products, asking about new construction versus R&R and potential destocking. He also asked about the dichotomy between soft transactional business and strong order trends in Workplace Furnishings, and whether the residential weakness might persist into early 2025.

Answer

CEO Jeff Lorenger and EVP V.P. Berger explained the residential softness is concentrated in the short-cycle stove business, which is normalizing slower than expected due to economic uncertainty. For Workplace Furnishings, Lorenger noted the transactional business is historically volatile and sensitive to economic sentiment, viewing the current dip as temporary. He clarified that while contract project shipments are being delayed into 2025, this is lengthening the sales cycle and building a stronger backlog. CFO Marshall Bridges added that it is premature to project 2025 residential trends but acknowledged current conditions could persist in the near term.

Reuben Garner asked if any costs were incurred in Q4 related to shelf space wins or if any are foreseen, such as buying inventory. He also inquired about the nature of contractor agreements, specifically if competitors or Trex are locking in contractors, and if the benefits of recent changes might be realized more in 2027 than 2026.

Answer

Bryan Fairbanks, President and CEO, confirmed no costs were incurred in Q4 for shelf space wins, but some are embedded in the 2026 guidance. He explained that Trex has a mix of formal and less formal contractor agreements, with exclusivity being less common. Contractors often choose brands based on strong support, product quality, and growth incentives, with many working with multiple brands while Trex remains their largest business driver.

Reuben Garner asked if there were any costs associated with shelf space wins in Q4 2025 or if any are foreseen in 2026. He also inquired about Trex's strategy for locking in contractors with agreements and whether the benefits of recent changes might be more evident in 2027 than 2026.

Answer

Bryan H. Fairbanks, President and CEO, confirmed no Q4 costs for shelf space wins but stated that some costs are embedded in the 2026 guidance. He explained that contractor agreements are a mix, with some working exclusively with Trex due to strong support and incentives, while others maintain flexibility. He implied that benefits are ongoing and not solely deferred to 2027.

Reuben Garner asked for details on the onetime $5 million cost associated with the railing transition and its expected benefits. He also questioned the relationship between the inventory drawdown at distribution and weaker demand for entry-level products.

Answer

CEO Bryan Fairbanks explained the $5 million cost covers merchandising, literature, and other market launch expenses for the company's largest-ever new product rollout. He clarified that distributors have already adjusted their inventory to reflect weaker entry-level demand, and the Q4 drawdown aligns with their desired year-end positioning.

Reuben Garner inquired about factors that exceeded expectations in Q4 profitability, Boise Cascade's approach to guidance, and what could lead to similar outperformance in Q1 2026. He also asked if the elevated reliance on warehousing indicates continued customer cautiousness, and for details on what drives Boise Cascade's outsized growth in general line products, including home centers, and the role of commodity market volatility.

Answer

Kelly Hibbs, CFO, clarified that Q4 guidance was not sandbagged but saw better-than-expected activity in the latter half of the quarter, particularly in BMD, coupled with strong cost control. Jeff Strom, Incoming CEO, added that Q4 was warehouse-centric, indicating strong reliance on their material availability, and confirmed customer cautiousness for H1 2026. Jo Barney, EVP of Building Materials Distribution, reiterated the strategic focus on general line growth, improving margins, and strong commodity performance. Jeff Strom further emphasized the intense focus on reducing net working capital by dealers, leading to reliance on Boise Cascade, and noted that commodity market volatility can create opportunities for improved margins.

Reuben Garner asked why EWP volumes have returned to pre-2020 levels despite a higher level of housing starts, questioning if changes in home size or type were the cause. He also inquired about the downside risk to pricing given the current volume environment and industry capacity utilization.

Answer

CEO Nate Jorgensen explained that the discrepancy is likely due to the mix of housing, particularly the geographic location and type of construction. For example, slab-on-grade homes in the Sun Belt require less EWP than two-story homes with basements. CFO Kelly Hibbs provided capacity utilization rates, which were 75-80% in Q1 and rose to the low 80s in April, indicating a solid operating rate relative to the demand environment.

Reuben Garner from Benchmark sought clarification on Deckorators' 2025 decking sales ($165 million split between SureStone and composite) and the projected $100 million increase for 2026, asking about load-in benefits and the status of new capacity. He also inquired about green shoots or leading indicators for growth in the packaging business and the outlook for the Factory-Built segment in 2026 following a healthy 2025.

Answer

Mike Cole, Chief Financial Officer, confirmed the Deckorators sales figures and growth expectations, noting that the $100 million growth is predominantly in decking and will see load-in in Q1 and Q2 2026. Will Schwartz, President and CEO, explained that Selma is fully operational, while Buffalo will come online by the end of Q1/early Q2, with full capacity expected in the back half of the year. For packaging, Schwartz noted early green shoots in Structural Packaging due to strategic sales and nearshoring, but it's still too early to call an inflection to growth. For Factory-Built, Schwartz sees opportunity in addressing affordability challenges, while Cole added that new products like the Endurable drop-down deck and BRAWN branding efforts show good momentum despite some commodity share loss.

Reuben Garner sought clarification on Deckorators' 2025 decking sales figures and the projected $100 million growth for 2026, including the impact of 'load-in' and external distribution expansion. He also asked about the current operational status and optimization timeline for the new Deckorators capacity. Additionally, he inquired about any 'green shoots' or leading indicators suggesting an inflection to growth in the packaging business, questioning the conservatism of the flat to low single-digit outlook.

Answer

An unnamed executive confirmed 2025 decking sales were about $165 million (more weighted to mineral-based composite) with $80 million in railings, and the $100 million growth in Deckorators for 2026 is predominantly from decking. President and CEO William G. Schwartz noted that load-in will occur in Q1 and Q2 2026 across all business areas, as 2025 sales were capacity-limited. He stated that Selma is fully operational with ongoing optimization, while Buffalo will come online by the end of Q1/early Q2, reaching full capacity in the back half of the year. An unnamed executive added that little margin lift was seen in 2025 due to unoptimized capacity, with most margin lift expected in 2026. For packaging, William G. Schwartz mentioned it's still early but pointed to progress in Structural Packaging with multinationals and potential nearshoring opportunities as green shoots.

Reuben Garner from The Benchmark Company LLC asked whether the new Deckorators marketing campaign targets contractors or consumers, sought details on stabilization trends in the Packaging segment, and questioned how current site-built profitability compares to pre-pandemic levels.

Answer

CEO Will Schwartz clarified that the marketing campaign is primarily driven towards the consumer to explain the value of the SureStone technology. He described the Packaging segment as having stabilized sequentially but not yet showing signs of improvement in a still-difficult market. CFO Michael Cole added that pricing and margins in the site-built segment have largely normalized and are now under more pressure than they were pre-pandemic.

Reuben Garner from The Benchmark Company inquired about the specifics of the Deckorators customer transition, the total revenue capacity following recent expansions, and whether competitive pricing in the Site Built segment has stabilized or is expected to worsen.

Answer

Chief Executive Officer William Schwartz confirmed the Deckorators transition was mostly complete and would normalize in Q2. Chief Financial Officer Michael Cole detailed the capacity expansions, including two $100 million projects at the Sunbelt plant and the new Buffalo facility, which collectively support the goal of doubling market share over five years. Regarding Site Built pricing, Cole noted a significant step-down from Q4 to Q1 and stated that visibility is too limited to call a bottom, expecting the challenging trend to continue.

Reuben Garner explored the potential for UFP Industries to increase its use of Southern Yellow Pine to offset lumber tariff impacts. He also questioned the state of the Deckorators sales channel, asking if there was a noticeable difference between sell-in and sell-through, indicating potential destocking. Lastly, he asked if there were any material changes to the company's capital expenditure strategy.

Answer

CEO William Schwartz confirmed that if tariffs drive up prices of other wood species, the adoption of Southern Yellow Pine would likely increase, continuing a recent trend. On Deckorators, Schwartz stated he could not speak to any significant changes in channel inventory levels but noted that product takeaway is good. CFO Michael Cole addressed CapEx, reaffirming the company's commitment to an elevated spending plan for growth and automation, with no material changes to the strategy, though he noted a pivot from greenfield to M&A is always possible if valuations are right.

Reuben Garner from Stifel asked for a breakdown of the announced $70 million in annualized cost reductions and inquired about increased competitive pressures in markets beyond Packaging, such as Site Built construction.

Answer

CEO Matt Missad explained that the cost reduction initiatives are interconnected across facility consolidations, operating costs, and SG&A, making a specific breakdown by bucket difficult. CFO Mike Cole added that of the $35 million in actions currently underway, approximately half relates to SG&A and half to capacity consolidation. Regarding competition, Matt Missad confirmed that as demand softens in markets like Site Built, competitive pressure naturally increases as customers seek greater value.

Reuben Garner asked for a deeper dive into the strong performance of Interface's healthcare and education segments, inquiring about the proportion of share gain versus market spending tailwinds, and the projected runway for spending in these categories beyond 2026.

Answer

Laurel Hurd, President and CEO, emphasized favorable macro environments for both segments. For education, she cited investments, preference for Interface products (design, performance, sustainability, carbon footprint), and share gains, especially in K-12 due to approachable price points. For healthcare, she pointed to aging populations, preventative care focus, and technology, along with share gains. She highlighted the combined selling team's impact in healthcare, enabling cross-selling of the full product suite (Interface and Nora) to customers. Bruce Hausmann, VP and CFO, added that Interface has a "strong right to win" in these segments due to product design, performance, and sustainability alignment.

Reuben Garner asked for insights into the U.S. business by geography and customer size, specifically looking for signs of acceleration in major cities or with larger customers. He also questioned how much of the strong healthcare and education growth was due to share gains and the future runway for spending in these categories.

Answer

Laurel Hurd, President and CEO, noted strong recovery in New York and the Bay Area for corporate business, with Texas and the Southeast remaining robust. She mentioned 80% of business is renovation, 20% new construction, with customer sizes showing similar trends. Ms. Hurd attributed healthcare and education growth to favorable macro environments and significant share gains, particularly in K-12 education from approachable price points and in healthcare due to the combined selling team offering a full product suite. Bruce Hausmann, VP and CFO, added that low customer concentration is a business strength.

Reuben Garner inquired about the drivers behind MillerKnoll's Q2 financial performance, specifically the better-than-expected gross margin, high-end revenue, and higher OpEx. He also asked about the consistency of order rates, particularly in North America contract, and the impact of AI on customer demand and office design.

Answer

Kevin Veltman, Chief Financial Officer, attributed the strong gross margin to channel and product mix, pricing realization, and tariff mitigation, while higher OpEx was due to variable selling costs, expense timing, and FX. He noted consistent mid-single-digit organic order growth across all segments and months, with sequential improvements post-tariff uncertainty. John Michael, President of North America Contract, highlighted strength in the Bay Area, Southern California, and the Northeast Coast, with energy, professional services, and legal sectors being active, while public sector, pharma, and banking were softer. Andi Owen, Chief Executive Officer, stated that while AI's impact on workspaces is currently minimal, the company anticipates future changes in work methods and productivity gains.

Reuben Garner inquired about the drivers behind MillerKnoll's second-quarter gross margin and revenue exceeding expectations, as well as the higher operating expenses. He also asked about the consistency of order rates in the Americas contract segment throughout the quarter, recent pipeline trends, and the potential impact of AI on customer demand and office design.

Answer

Kevin Veltman, Chief Financial Officer, attributed the better-than-expected gross margin to channel and product mix, along with strong pricing realization and tariff mitigation efforts. He noted that operating expenses were higher due to variable selling costs from sales over delivery, timing of expenses, and FX. Veltman also stated that order momentum was consistent across all three months of the quarter and continued into the new quarter at mid-single-digit rates, citing sequential improvements in external and internal measures post-tariff uncertainty. John Michael, President of North America Contract, added that previously slower markets like the Bay Area and Southern California are picking up, with strength in energy, professional services, and legal sectors, while public sector, pharma, and banking are slightly softer. Andi Owen, Chief Executive Officer, clarified that the impact of AI on actual workspaces is currently minimal but acknowledged future changes in productivity and work collaboration.

Reuben Garner asked about the normalized growth trends in the North America Contract (NAC) segment, seeking a breakdown between volume and pricing, the evolution of these trends, and the outlook for future quarters, as well as any changes in discounting practices.

Answer

Kevin Veltman (Interim CFO) confirmed the normalized growth rate for NAC over the past two quarters was 3.3%, driven primarily by volume, with positive underlying demand and funnel indicators. Andi Owen (CEO) added that order certainty has improved with shorter lead times, and the pull-forward activity unfolded as expected. Andi Owen also stated that discounting has remained stable, a point John Michael (President of North America Contract) concurred with.

Reuben Garner asked about the normalized growth in North America Contract (NAC), seeking a breakdown between volume and pricing, and the outlook for future trends. He also inquired about any increased discounting and the specific pressures on retail profitability, including new store expenses, freight, and tariffs, and their impact on margins.

Answer

Interim CFO Kevin Veltman and VP of Investor Relations Wendy Watson confirmed the normalization approach for NAC, noting volume as a primary growth driver and stable discounting. They highlighted positive funnel indicators and strong early Q2 orders. For retail, Wendy Watson and Kevin Veltman explained that new store expenses were the largest factor in margin degradation, with impacts expected through Q3, becoming accretive by Q4/Q1 next year. Kevin Veltman detailed that new store costs are in operating expenses, while tariffs and freight split the remaining margin impact.

Reuben Garner inquired about normalizing North America Contract (NAC) segment growth, specifically asking for a breakdown of volume versus pricing trends over the past several quarters. He also sought clarification on discounting practices and the specific financial impact of freight, new store expenses, and tariffs on global retail profitability, including the timeline for new store expense impact on margins.

Answer

Kevin Veltman, Interim Chief Financial Officer, explained that normalized NAC growth averaged 3.3% over the combined Q4 FY25 and Q1 FY26, with volume being a key driver and underlying demand remaining positive. Andi Owen, Chief Executive Officer, noted stable discounting and a shift in the sales funnel towards more certain, shorter-term orders. Kevin Veltman further detailed that new store expenses accounted for over half of the 190 basis points decline in retail operating margins, with these costs primarily impacting operating expenses rather than gross margins. Debbie Propst, President of Global Retail, added that unfavorable FX also impacted gross margin.

Reuben Garner inquired about the normalized growth trajectory of the North America Contract (NAC) segment, seeking a breakdown between volume and pricing, and the stability of discounting practices. He also asked for a detailed explanation of the factors impacting global retail profitability, specifically the financial impact and timeline of new store opening expenses, freight costs, and tariff-related effects on margins.

Answer

Interim CFO Kevin Veltman confirmed normalized NAC growth at 3.3% over two quarters, driven primarily by volume, with positive external demand indicators. CEO Andi Owen added that the shift to shorter-term orders in the funnel supports consistent NAC growth and confirmed stable discounting. For retail, Ms. Owen stated that new store expenses are the primary driver of margin degradation, expected to impact Q1-Q3 before becoming accretive by Q4/Q1 next year. Mr. Veltman clarified that new store costs affect operating margins, while tariffs, freight, and unfavorable FX (as noted by President of Global Retail Debbie Propst) impact gross margins.

Reuben Garner of The Benchmark Company LLC sought clarification on the $55-60 million order pull-forward in North America, asking about the timing of those projects, trends in the sales funnel, standout end-market performance, the duration of the tariff-related margin pressure, and capital allocation priorities for fiscal 2026.

Answer

CFO Jeff Stutz confirmed the pull-forward estimate and noted underlying demand remained strong. President of North America Contract John Michael stated the orders were from projects in the funnel, with strength in public sector and healthcare. CEO Andi Owen explained the margin impact from tariffs is a two-quarter dynamic, with recovery expected in the second half of the year. CFO Jeff Stutz highlighted that capital allocation will now prioritize debt reduction and CapEx for new stores over the share buybacks seen in fiscal 2025.

Reuben Garner questioned the drivers behind the reduced full-year earnings outlook beyond tariffs, the strategy of using a list price increase instead of a surcharge to combat cost pressures, and the goals and expected savings from the recent restructuring actions.

Answer

CFO Jeff Stutz explained the outlook reflects prudence due to macroeconomic uncertainty affecting confidence, not a change in business performance. He clarified the price increase addresses broad inflation, including domestic steel, not just tariffs. The $4 million restructuring charge, mainly from workforce reduction, is expected to yield $4 million to $4.5 million in annualized savings. CEO Andrea Owen added this allows the company to protect investments in growth areas.

Reuben Garner referenced a positive dealer survey and asked for management's perspective on customer feedback post-election. He also sought clarification on the full-year guidance, noting that it implies a significant top-line and margin acceleration in the fourth quarter, and asked for the underlying revenue assumptions.

Answer

President of Americas Contract, John Michael, confirmed that dealer sentiment is improving and cited strong leading indicators, including a 64% year-over-year increase in 12-month funnel additions. CFO Jeff Stutz explained that the anticipated Q4 improvement is primarily a 'top-line story,' with expected revenue acceleration driving operating leverage, rather than a major margin rate expansion. He projected Q4 gross margin to be modestly better than Q2's but declined to provide a specific full-year revenue guide.

Reuben Garner asked about the long-term potential for gross margins, which have stabilized in the 38.5% to 39.5% range, and how much future improvement depends on volume versus other controllable factors. He also requested more detail on the 'improving macro backdrop' assumption embedded in the full-year guidance.

Answer

CFO Jeff Stutz explained that while margins have stabilized, the next significant improvement will come from leveraging fixed overhead costs as sales volume increases, an effect they anticipate in the second half of the fiscal year. CEO Andi Owen added that long-term, the planned growth of the higher-margin retail business will also contribute positively to the overall margin profile. Regarding the macro outlook, Andi Owen stated the optimism applies across all business segments, driven by increased certainty from the Fed, consistently positive leading indicators, and the potential for a housing market rebound to stimulate the retail business.

Reuben Garner asked for details on the internal efforts made to mitigate risks of similar issues at other facilities, particularly those from the Tyman acquisition, following the Mexico issue. He also sought clarification on the Q1 SG&A figure, its significant increase from a year ago, and whether it represents a good run rate. Finally, he inquired about the price outlook, cost of goods stability, and the overall price-cost dynamic for 2026.

Answer

George Wilson (Chairman and CEO, Quanex) explained that after identifying the Mexico issue, they implemented a remediation plan and conducted a deep dive across all facilities using their 8D problem-solving philosophy to prevent replication, expressing confidence in their controls. Scott Zuehlke (CFO, Quanex) confirmed the Q1 SG&A as a decent run rate for the full year, attributing the increase to accruing bonuses at target (unlike the previous year), one-time benefits in Q1 last year from legacy Tyman, and higher benefit costs, inflation, and merit increases. George Wilson added that costs have generally stabilized, with anticipated inflationary pressure in oil-based products, and that tariffs, while impactful, seem to have softened.

Reuben Garner asked about the internal efforts made to prevent similar operational issues at other facilities, particularly those acquired from Tyman, following the Monterrey incident.

Answer

George Wilson (Chairman and CEO, Quanex Building Products Corporation) explained that the company conducted a deep dive across all facilities, not just Tyman acquisitions, utilizing their 8D problem-solving philosophy to identify and mitigate similar risks. He expressed confidence in the controls implemented.

Reuben Garner followed up to ask what percentage of Quanex's business or how much revenue comes from the Mexico facility.

Answer

George Wilson, Chairman, President & CEO, stated that this level of disclosure has not been provided, noting that the facility is a cost center and its revenue flows through other facilities.

Reuben Garner inquired about the expected progression of margins for fiscal 2025, the reasons for the growth divergence between the cabinet and fenestration segments, and the company's confidence level in its full-year guidance.

Answer

CEO George Wilson clarified that the significant gross margin improvement expected for the rest of the year is due to the roll-off of a purchase price adjustment (PPA) step-up from the Tyman acquisition that impacted Q4 and Q1. Executive Scott Zuehlke attributed the segment divergence to harsher winter weather affecting the window and door market more than cabinets, and noted that cabinets often lead the cycle. Zuehlke also affirmed confidence in the full-year guidance, stating their initial outlook was realistically conservative and that expected second-half improvement is based on normal seasonality, supported by strong progress on acquisition synergies.

Reuben Garner asked about the potential impact of tariffs on the newly combined business, particularly any exposure from Tyman's operations, and also inquired about the overall pricing outlook for the coming fiscal year.

Answer

CEO George Wilson stated that the Tyman team had built a robust supply chain to mitigate tariff risks and capitalize on opportunities, and he noted that tariffs have historically been a net positive for Quanex's North American cabinet business. Regarding pricing, CFO Scott Zuehlke indicated a potential for prices to be neutral to up, but emphasized that financial models are primarily driven by volume. Wilson added that the company is being cautious with pricing guidance due to macro uncertainties like inflation and potential tariff impacts.

Reuben Garner asked for an update on customer conversations regarding the Tyman acquisition, focusing on potential revenue synergies or dis-synergies. He also inquired about any signs of consumer trade-down in the window or cabinet markets and sought a high-level perspective on whether growth could resume in 2025.

Answer

CEO George Wilson stated it is too early to identify specific revenue synergies but sees no initial dis-synergy risk, arguing the combined company's larger scale provides more security for customers. He noted that affordability pressures are impacting the more discretionary cabinet business more than the window business. Executive Scott Zuehlke added that while it's too early for a formal 2025 outlook, the company feels there is a prospect for a return to growth, particularly in the second half of the year.

Reuben Garner from The Benchmark Company sought clarification on the impact of pricing actions on inflation and tariff costs, specifically whether they fully offset costs or recovered margin, and the expected flow-through of earlier pricing actions. He also asked about the cadence of order patterns in the Americas during the quarter and the mixed perspective on how new offices are being designed compared to previous periods.

Answer

Dave Sylvester, Senior Vice President and Chief Financial Officer, clarified that for Q2 year-over-year, pricing benefits offset tariffs and inflation, yielding a slight margin. However, cumulatively, the company is still catching up due to tariffs hitting immediately and pricing lagging, expecting another couple of quarters to fully recover. He noted that Americas order patterns were evenly spread across the quarter, with average weekly demand steady, and the first three weeks of the next quarter were roughly flat year-over-year. Sara Armbruster, President and Chief Executive Officer, added that customers are increasingly rethinking office spaces to support strategic goals, focusing on redesigns for attraction, diverse work styles, privacy, collaboration, and technology integration, moving beyond pre-COVID norms.

Reuben Garner sought clarification on the cumulative impact of Steelcase's pricing actions on inflation and tariff costs, the cadence of Americas order patterns during Q2 fiscal 2026 and quarter-to-date, and any notable changes in office design mix for project-oriented, larger customer engagements.

Answer

David Sylvester, SVP & CFO, Steelcase, clarified that while Q2 pricing actions offset year-over-year inflation and tariffs, the company is still catching up on a cumulative basis, expecting it to take a couple more quarters. He noted that Americas order patterns were evenly spread across Q2, with the first three weeks of the current quarter being roughly flat year-over-year. Sara Armbruster, President & CEO, Steelcase, highlighted a trend of customers increasingly redesigning spaces to support strategic goals, incorporating new concepts for privacy, collaboration, and technology.

Reuben Garner from The Benchmark Company sought clarification on the impact of Steelcase's pricing actions, specifically whether they have fully offset inflation and tariff costs on a cumulative basis and how much more flow-through is expected. He also asked about the cadence of Americas' order patterns during the quarter and the start of the next quarter, and any notable changes in office design mix for project-oriented, large customer, return-to-office initiatives compared to previous periods.

Answer

CFO Dave Sylvester clarified that while Q2 pricing benefits offset year-over-year inflation and tariffs, the company is still cumulatively catching up due to tariffs hitting immediately and pricing lagging. He anticipates another couple of quarters to fully recover margins on these costs. Sylvester also noted that Americas' order patterns were evenly spread across the quarter, with the first three weeks of the next quarter being roughly flat year-over-year. CEO Sara Armbruster added that customers are increasingly rethinking space to support strategic goals, incorporating new concepts like privacy, collaboration, and technology integration, moving beyond pre-COVID norms.

Reuben Garner inquired about the magnitude of the drag from the education and government sectors on Q1 orders, the resulting strength in the core corporate business, the potential for demand pull-forward from price increases, and the outlook for the full fiscal year.

Answer

SVP & CFO David Sylvester quantified that in the Americas, the education and government sectors represented about one-third of orders and were the source of the decline, while the other two-thirds, led by corporate customers, grew. He clarified that while there was order pull-forward ahead of price changes, it was contained within each respective quarter. He also reiterated the full-year targets for mid-single-digit organic revenue growth and adjusted operating margin expansion.

Reuben Garner from The Benchmark Company inquired about the flexibility of the new tariff recovery charge and its mechanics. He also asked for an update on growth investments, particularly regarding performance in the small and midsized business (SMB) segment.

Answer

SVP and CFO David Sylvester explained the tariff recovery charge is a stated percentage of list price that can be adjusted up or down depending on the tariff landscape. President and CEO Sara Armbruster clarified that recent SMB softness was specific to Europe, while the Americas SMB segment saw order growth for the full year and remains a focus for investment. Sylvester added that the AMQ brand had a 'terrific year' within the Americas.

Reuben Garner inquired about the financial impact of the new ERP system, including the nature of the $20 million in FY26 costs and potential offsets. He also asked for context on the strong 15% order growth in early December and sought a geographic breakdown of the FY26 growth forecast.

Answer

CFO Dave Sylvester explained the $20 million ERP impact is a year-over-year swing from capitalized to expensed costs, separate from go-live inefficiencies, and that offsetting benefits would not fully cover this in FY26. He noted the 15% order growth was on top of 7% growth in the prior year, attributing it to delayed large corporate projects. For FY26, he stated the company is targeting profitability in the International segment through volume growth and cost reductions.

Reuben Garner from The Benchmark Company asked about growth drivers outside of large corporate, commentary on a potential West Coast tech market recovery, and an overview of the challenged International segment.

Answer

David Sylvester, SVP & CFO, highlighted strong performance and investment in education, health, and government sectors. Sara Armbruster, President & CEO, added that investments are tailored to each segment. Regarding the West Coast, Sylvester confirmed that internal intel suggests the tech sector is 'starting to wake up.' For the International segment, Armbruster acknowledged challenges but noted strong growth in India and a continued focus on driving efficiency and margin improvement elsewhere.

Reuben Garner from The Benchmark Company LLC inquired about the primary driver of the customer pause related to tariffs, the scope of the 'China plus one' sourcing strategy, and the outlook for gross margins and operating expenses for the rest of the year.

Answer

CEO David Bruce explained the customer pause was due to uncertainty over the magnitude of initially proposed tariffs, which were later reduced, rather than a drop in consumer demand. He confirmed the 'China plus one' strategy applies to all business segments, including sanitary ware, and anticipates a significantly different global sourcing footprint by next year. Bruce and CFO Jae Chung noted that operating expenses were prudently managed due to market uncertainty. Bruce also expressed confidence in achieving gross margins in the 'upper 20s' for the second half, supported by new business programs.

Reuben Garner of The Benchmark Company sought a detailed breakdown of the 2025 operating income guidance, particularly the impact of tariffs. He also asked about the mechanics of implementing price adjustments for tariffs, the potential need for sourcing diversification, and the risks to the flat R&R market outlook.

Answer

President and CEO, David Bruce, clarified that the breakeven operating income guidance for 2025 conservatively includes expected tariff pressures. He explained that FGI manages tariff impacts through collaborative price adjustments with partners, facilitated by their new SAP system. Bruce confirmed that the company is actively diversifying its sourcing to mitigate these pressures and that new program wins provide a buffer against the flat R&R market outlook.

Reuben Garner inquired about the key drivers of FGI's 20% year-over-year revenue growth, specifically asking if the success in Bath Furniture was a sustainable trend or a one-time benefit. He also questioned the gross margin decline, the reasons for lowering profitability guidance despite raising revenue forecasts, and the general industry outlook for 2025 from FGI's customers.

Answer

President and CEO David Bruce confirmed that the growth in Bath Furniture is sustainable and not a one-time event, attributing it to a successful reengineering of the product assortment to meet market pricing trends, which is leading to market share gains. Bruce explained the quarterly gross margin dip was temporary, caused by spiked ocean freight rates, a higher mix of cabinet shipments, and promotional costs for new products, stating confidence in returning to the 27%+ range. He noted that while these factors and continued investments in growth initiatives impacted the profitability outlook, the investments are successfully driving top-line growth that will be leveraged over time. For 2025, Bruce described the customer outlook as 'cautiously optimistic' and 'muted,' but expects FGI to outperform the market by gaining incremental new sales.

Reuben Garner of Stifel inquired about the timing and impact of the recent SAP system implementation, potential signs of consumer weakening or destocking at the entry-level, and the outlook for growth drivers within the company's control for 2025.

Answer

President and CEO David Bruce, with input from CFO Perry Lin, stated the SAP system went live on May 1, causing temporary shipment delays that are expected to shift into Q3, not represent lost sales. Bruce noted that destocking issues were addressed in the prior year and are not a current concern; in fact, inventory has increased to support new program launches. For 2025, he expressed cautious optimism, highlighting strong momentum in the kitchen business and new programs that should allow FGI to outpace broader market trends.

Reuben Garner of The Benchmark Company LLC questioned the drivers behind the U.S. revenue decline, asking if Australian silica-related issues were impacting U.S. demand. He also sought clarification on the sequential gross margin decrease, the year-over-year impact of pricing versus volume, and whether the recent cost-saving initiatives were already reflected in the low Q2 SG&A expenses.

Answer

CEO Yosef Shiran stated there was no link between Australian regulatory issues and U.S. demand, attributing softness to other market factors. CFO Nahum Trost explained the gross margin decline was due to lower production and fixed cost absorption at the Israeli plant, coupled with competitive pricing adjustments. Trost noted that while past cost actions and tight controls lowered Q2 SG&A, the newly announced $10 million in savings will begin impacting results in Q3 and Q4.

Reuben Garner asked about the drivers behind the sequential gross margin improvement in Q1, the revenue outlook for the remainder of 2025, the potential impact of new U.S. tariffs on operations and competition, the company's sourcing from China for the U.S. market, and for clarification on the scope of the $50 million provision for silicosis lawsuits.

Answer

Nahum Trost (executive) attributed the sequential gross margin improvement to modest revenue growth and benefits from restructuring actions. He noted that while Q1 is historically the seasonal low, the company expects gradual revenue increases as the year progresses. Regarding the lawsuits, Trost clarified that the $50 million provision covers probable losses in Israel, Australia, and two specific U.S. cases, offset by a $31.6 million insurance receivable, with the majority of U.S. claims still in early stages and not yet provisioned. Yosef Shiran (executive) added that most competitors face similar tariff pressures, which the company will mitigate through partner negotiations and potential price increases. Shiran also confirmed that products sourced from China are not sold in the U.S., thus avoiding a direct impact from those specific tariffs.

Reuben Garner of The Benchmark Company inquired about the current state of end markets, seeking an outlook on revenue for Q1 and the full year 2025. He also asked for a breakdown of the Q4 revenue decline between pricing pressure and volume, and requested clarification on the expected dollar amount of cost savings in 2025 from recent initiatives.

Answer

Executive Nahum Trost responded, stating that Q1 2025 market dynamics are expected to be similar to Q4 2024, with gradual improvement anticipated as the year progresses. He noted that the revenue decline was primarily driven by soft market conditions and project deferrals rather than significant pricing pressure. Trost confirmed that the company expects approximately $10 million in incremental cost savings in 2025 from its restructuring efforts, which are part of a larger $45 million savings program compared to 2022.

Reuben Garner of Benchmark asked if the back-half pricing and volume outlook was concentrated in the Hardware and Protective Solutions (HPS) segment. He also requested an update on the 'dual faucet' sourcing strategy and progress toward reducing China sourcing to 20%.

Answer

CFO Robert Kraft confirmed that the HPS segment has more pricing impact due to greater tariff exposure. President & CEO Jon Michael Adinolfi reiterated confidence in reaching the ~20% China sourcing goal by year-end, naming Thailand, Vietnam, and India as examples of countries benefiting from the supply chain diversification.

Reuben Garner asked about the specific product categories remaining in China and their historical price elasticity. He also inquired whether the announced price increases are permanent or if the company has considered using surcharges, especially if tariffs are reversed.

Answer

President and CEO Jon Michael Adinolfi identified core fasteners, some hardware, and dip gloves as products still sourced from China, noting the company is actively developing alternative sources. Regarding pricing, he explained that due to SKU and customer complexity, they are implementing price increases rather than surcharges, but will work with customers to adjust costs over time if the tariff situation changes.

Reuben Garner questioned the confidence level in the 2.5% new business growth for 2025, asking how much was already secured. He also asked about the potential costs associated with implementing price changes in stores and whether the company or its customers were building inventory ahead of possible tariffs.

Answer

CFO Robert Kraft confirmed that 'basically all' of the 2.5% new business growth is from committed wins, but the final result is subject to market volumes in those categories. CEO Jon Adinolfi estimated the cost of relabeling for price changes at $1 million to $2 million. The call was disconnected before he could fully address the inventory question related to tariffs.

Reuben Garner of The Benchmark Company asked for geographic color on the company's housing starts forecast, particularly regarding performance in key, high-volume markets like Texas and Florida.

Answer

CEO Peter Jackson confirmed that the company is feeling the impact in major markets like Florida and Texas, where new construction has been significant. He noted that while some regions like the Northwest are more stable, the overall map has 'a lot of red,' and the weakness is concentrated in the core, traditional single-family starts markets where the company has a large presence.

Reuben Garner questioned the sequential gross margin trends, asking why structural margins didn't see a larger boost from rising lumber prices and what was driving specialty margins lower despite volume growth. He also asked for an update on the M&A environment and seller valuations.

Answer

SVP, CFO & Treasurer, Kelly Wall, attributed the muted structural margin performance to a combination of competitive pressures and significant price declines in panels, which offset gains from lumber. On the specialty side, she cited ongoing competitive pressure and a product mix shift toward the multifamily channel as factors for the lower margin, noting the company is focused on absolute gross profit dollar growth. CEO & President, Shyam Reddy, commented on M&A, stating that bid-ask spreads have narrowed and more opportunities are available compared to 18-24 months ago.

Reuben Garner of The Benchmark Company LLC questioned the sequential gross margin changes, asking why structural margins weren't higher given rising lumber prices and what was driving specialty margins lower despite volume growth. He also requested an update on the M&A environment.

Answer

CFO Kelly Wall attributed the pressure on structural margins to intense competition and significant price declines in panels. For specialty margins, she cited competitive pressures and a different product mix from the growing multifamily business, noting the company is willing to accept slightly lower margins for absolute gross profit dollar growth. CEO Shyam Reddy commented on M&A, stating that bid-ask spreads have narrowed and the deal pipeline is more active than it was 18-24 months ago.

Reuben Garner of The Benchmark Company LLC questioned the sequential gross margin trends, asking why structural margins didn't see a larger boost from rising lumber prices and why specialty margins were drifting lower despite volume growth. He also asked for an update on the M&A environment, specifically regarding seller valuations.

Answer

SVP, CFO & Treasurer Kelly Wall explained that structural margins were pressured by competitive dynamics and a nearly 10% price decline in panels, which offset lumber price gains. For specialty, she cited competitive pressures and a different product mix in the growing multifamily channel for the margin trend, noting a willingness to accept slightly lower margins to capture absolute gross profit dollars. CEO & President Shyam Reddy added that on the M&A front, the pipeline is active and bid-ask spreads have narrowed significantly compared to two years ago, leading to more opportunities.

Reuben Garner followed up on specialty margins, asking why competitive pressures were increasing in April despite improving volumes. He also questioned if new growth initiatives, such as multifamily and greenfields, were causing near-term margin pressure, and asked which specific products are exposed to tariffs.

Answer

CEO Shyam Reddy attributed the increased competition to a softer overall market with ample supply, forcing aggressive pricing to win and maintain programs. He clarified that growth in multifamily and national accounts is a strategic share gain, not a source of margin pressure, and that greenfields like Portland are performing ahead of plan. Reddy identified the PrimeLinx millwork category and lumber as the primary product areas exposed to international tariffs.

Reuben Garner sought clarification on the greenfield strategy, particularly the ability to achieve a high specialty product mix early on. He also asked about any demand shifts toward Southern Yellow Pine due to tariff concerns and requested details on the company's strategy for gaining share in the multifamily housing market.

Answer

Shyam Reddy, President and CEO, explained that strong support from key specialty suppliers allows new greenfields to launch with a rich specialty mix, not just relying on structural products. He noted no significant demand shift to Southern Yellow Pine yet, citing U.S. mill capacity as a constraint. On multifamily, Reddy detailed a comprehensive strategy involving a dedicated team, targeting pro dealers and national accounts, and making CapEx investments in its fleet to support job site deliveries, which is successfully driving share gains in a market where BlueLinx was historically underpenetrated.

Reuben Garner sought clarification on the significant improvement in structural margins from the start of Q3 to the final 11% figure, asking if a prior inventory reserve reversal was the cause. He questioned if BlueLinx had to sacrifice volume to protect these margins and asked whether the better-than-market volume was due to a customer recovery or company-specific initiatives. Lastly, he inquired about inventory management strategies for specialty categories heading into the seasonally slower period.

Answer

CFO and Treasurer Andy Wamser confirmed that a $2.4 million inventory reserve taken in Q2 was reversed in Q3, which boosted the reported structural margin; he suggested the year-to-date margin of 9.8% is a more normalized figure. Wamser also highlighted that structural volume was up high-single-digits, indicating the company was not walking away from business. President and CEO Shyam Reddy attributed the strong volume performance to the company's share gain strategy rather than a broad market recovery. Regarding inventory, Reddy stated that BlueLinx manages to specific turn targets and that any customer destocking is a net benefit, with no signs of the significant inventory buildup seen post-pandemic.

Reuben Garner sought clarification on the 'normalization' of volume and price/mix, asking if price/mix could turn negative. He also asked how IBP would handle pricing negotiations if fiberglass manufacturers did not announce a price increase.

Answer

CFO Michael Miller confirmed that headwinds from business mix (less multifamily, more production builder) will continue, creating a 'large headwind' for price/mix. CEO Jeffrey Edwards expressed high confidence that manufacturers will, in fact, announce a price increase. He explained that pricing discussions with customers always account for material costs and other inflationary pressures to find a satisfactory solution.

Reuben Garner asked for a reminder of the company's long-term framework, the specific impact of commercial pricing actions on 2025 results, and whether the framework needs adjustment given current steel prices. He also sought clarity on the mechanics of project delays in new construction.

Answer

CEO Ramey Jackson commented that steel prices could rise again depending on the election outcome and potential tariffs. CFO Anselm Wong reiterated the long-term adjusted EBITDA margin target of 25% to 27%, stating that commercial actions would have a high-single-digit price impact on the storage business in 2025, offset by cost savings. Wong also confirmed that project delays are occurring both for projects that have already started and for those that were planned but have not yet begun.

Asked a two-part question about M&A: first, clarifying if recent low-margin acquisitions were in complementary businesses and how Beacon improves them, and second, about the current M&A pipeline and the impact of interest rates.

Answer

The executive confirmed the lower-margin acquisitions were primarily in the complementary business. Beacon improves them through scale, purchasing power, and operational capabilities like its TRI-BUILT brand and digital platform. The M&A pipeline remains robust and active, with no slowdown observed due to interest rate changes.